Question

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. a. The IRR calculation implicitly assumes that all cash flows are reinvested at the WACC. b. If a project has normal cash flows and its IRR exceeds its WACC, then the project’s NPV must be positive. c. If Project A has a higher IRR than Project B, then Project A must also have a higher NPV. d. The IRR calculation implicitly assumes that cash flows are withdrawn from the business rather than being reinvested in the business. e. If Project A has a higher IRR than Project B, then Project A must have the lower NPV.

Answer #1

a.Internal rate of return (**IRR**) is the interest
rate at which the net present value of all the cash flows (both
positive and negative) from a **project** or
investment equal zero. Internal rate of return is used to evaluate
the attractiveness of a **project** or investment. so
this statement is not correct

b. yes this statement is correct. IRR exceeds its WACC then the project shall be accepted as it earns higher than its expectation.

c. false this statement is not correct. NPV of the project depends on its size also appart from IRR. So there are posibilities that the project with big size may have lower IRR but have higher NPV.

d. false IRR calculation assumes cash flows are reinvested at the IRR

e. false

Which of the following statements is CORRECT? Assume that the
project being considered has normal cash flows, with one outflow
followed by a series of inflows.
A: The NPV of a relatively low-risk project should be found
using a relatively high WACC
B: The lower the WACC used to calculate it, the lower the
calculated NPV will be If a project’s NPV is greater than zero,
then its IRR must be less than zero
C: If a project’s NPV is...

Which of the following statements is correct? Assume the project
being considered has normal cash flows, with one outflow, followed
by a series of inflows:
If a project’s NPV is > 0, the IRR must be less than WACC
The higher the WACC used to calculate NPV, the lower the
calculated NPV will be
The NPV’s of relatively risky projects should be found using
relatively low WACC’s
If a project’s NPV is > 0, the IRR must be less than...

Which of the following statements is CORRECT? Assume that the
project being considered has normal cash flows, with one outflow
followed by a series of inflows.
a.
The NPVs of relatively risky projects should be found using
relatively low costs of capital.
b.
If a project's NPV is greater than zero, then its IRR must be
less than the cost of capital.
c.
The higher the cost of capital used to calculate the NPV, the
lower the calculated NPV will...

Which of the following statements is CORRECT? Assume that the
project being considered has normal cash flows, with one outflow
followed by a series of inflows.
Group of answer choices
The lower the cost of capital used to calculate a project's NPV,
the lower the calculated NPV will be.
If a project's NPV is less than zero, then its IRR must be less
than the cost of capital.
If a project's NPV is greater than zero, then its IRR must...

If a project being considered has normal cash flows, with one
outflow followed by a series of inflows, which of the following
statements is CORRECT?
A If a project's NPV is greater than zero, then its IRR must be
less than the WACC.
B If a project's NPV is greater than zero, then its IRR must be
less than zero.
C The higher the WACC used to calculate the NPV, the lower the
calculated NPV will be.
D A project's...

If you assume that a project being considered has normal cash
flows, with one outflow followed by a series of inflows, which
statement would be correct? Question 11 options:
a) The lower the cost of capital used to calculate a project's
NPV, the lower the calculated NPV will be.
b) If a project's NPV is less than zero, then its IRR must be
less than the cost of capital.
c) A project’s NPV is found by compounding the cash inflows...

If mutually exclusive projects with normal cash flows are being
analyzed, the net present value (NPV) and internal rate of return
(IRR) methods agree.
Projects Y and Z are mutually exclusive projects. Their cash
flows and NPV profiles are shown as follows.
Year
Project Y
Project Z
0
–$1,500
–$1,500
1
$200
$900
2
$400
$600
3
$600
$300
4
$1,000
$200
If the weighted average cost of capital (WACC) for each project
is 14%, do the NPV and...

1. Which of the following statements is correct?
a. A project with conventional cash flows is one with an initial
cash outflow followed by one or more cash inflows.
b. The NPV method determines how much the future value of cash
inflows exceeds the present value of costs.
c. All the answers are correct.
d. When two projects are independent, accepting one project
implicitly eliminates the other.
e. Conventional cash flow patterns could lead to conflicting
decisions by NPV and...

Which of the following statements is NOT
CORRECT?
a.
The IRR method takes into account the time value of money
b.
The IRR method values a dollar received today greater than a
dollar that will be received until sometime in the future
c.
The IRR method takes into account the cash flows over a
project’s full life
d.
The IRR method assumes that the cash flows to be received from a
project are to be reinvested at the WACC

The IRR evaluation method assumes that cash flows from the
project are reinvested at a rate equal to the project’s IRR.
However, in reality, the reinvested cash flows may not necessarily
generate a return equal to the IRR. Thus, using the modified IRR
approach, you can make a more reasonable estimate of a project’s
rate of return than the project’s IRR can.
Consider the following situation:
Cold Goose Metal Works Inc. is analyzing a project that requires
an initial investment...

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